On the off-chance that you haven't heard about Project Gutenberg before, it's a volunteer effort to digitize, archive, and distribute full texts of public domain books in open formats. WSJ interviewed Project Gutenberg's founder Michael Hart and reveals that he was approached by Google one year prior the official announcement of Google Book Search.

I talked to Google a year before Google's big announcement [in December 2004]. … They approached us. They sent us an email saying, "Hey, we'd like to talk to you." They let us tell them about all that we were doing. It took place at the big Google headquarters in Silicon Valley. They gave us a free lunch and everything. They were very polite, but very business-plan oriented. At a certain point, they sort of talked us out the door. So I heard about [Google Book Search] along with everybody else. Same with Yahoo.

So Google didn't want to work together with Mr. Hart. According to the latter, the search engine company decided for a different approach:

Google is working from the top down. It's very centralized. Project Gutenberg is the opposite: It's decentralized, it's grassroots. From the consumer's point of view, if you're trying to get a quotation from a book, you could get the book from Project Gutenberg and cut and paste, say, the whole "Hamlet" soliloquy. On Google, you can't. Also, ours is totally non-commercial. You won't find advertising on any of our pages.

Interesting. I'm assuming Google's only source of revenue with the product would be targeted advertising? I mean they can't charge for access to the content I assume. So I'm not sure why they wouldn't be able to crawl the contents of the Gutenberg archive and deliver ads based on what people are reading/searching for. Just seems like a lot of duplicate effort.

I assume the grassroots nature of Gutenberg is the major reason. Less control is always a scary proposition for a business.

Disclaimer: I am a Project Gutenberg volunteer, but I have no idea why the Google thing did not work out.

Many "open", volunteer-driven projects fail to get corporate cooperation other than some sponsorships. For PG to be interesting to Google, it should be accountable, it should be scalable, it should be many things you cannot get from PG simply because these are things you cannot ask of volunteers.